THQ Announces Fiscal 2005 First Quarter Results; Company Moves Fiscal 2005 Guidance to High End of Range to $1.10; Up 20% Over the Prior Year CALABASAS HILLS, Calif. -- THQ Inc. (Nasdaq:THQI) today announced operating results for its fiscal 2005 first quarter and moved earnings per share guidance to $1.10, the high end of its previous range, for the fiscal year ending March 31, 2005.
For the three months ended June 30, 2004, THQ reported net sales of $88.2 million and a net loss of $3.9 million, or $0.10 per share. For the same period a year earlier, the company reported net sales of $98.1 million and a net loss of $3.6 million, or $0.09 per share.
"Expanding our product portfolio with new original properties is a key strategic objective for THQ in fiscal 2005," said Brian Farrell, president and CEO, THQ. "We are thrilled with the successful launch and continued strong sales of Full Spectrum Warrior(TM), and we look forward to the launch of more exciting new brands later this fiscal year.
"Our portfolio of licensed content for both handheld and console systems also delivered favorable results in the June quarter with the successful launch of SONIC ADVANCE 3 for Game Boy(R) Advance and continued robust sales of catalog products. The recent video game console price cuts below $150 signal a new mass-market phase in which THQ excels and we were pleased to see strong sales of our titles for the mass-market consumer during the quarter," Farrell said.
Fiscal 2005 Financial Guidance
THQ moved guidance to the high end of its previous range for the fiscal year ending March 31, 2005 and provided initial guidance for the second quarter of fiscal 2005:
--For the fiscal year ending March 31, 2005, THQ continues to expect net sales of approximately $680 million. The company moved net income guidance to $1.10 per diluted share, the high end of its previous range, due primarily to expected product cost savings.
--For the second quarter of fiscal 2005, the company expects net sales of approximately $82 million and a net loss of about $0.20 per share. Key product releases anticipated for the quarter include WWE(TM) Day of Reckoning(TM) for the Nintendo(R) GameCube(TM), and Warhammer(R) 40,000: Dawn of War(TM) and Full Spectrum Warrior for the PC. The company announced that the new original PC title S.T.A.L.K.E.R.: Shadow of Chernobyl is now scheduled to ship in the fiscal fourth quarter in order to maximize its sales potential.
Farrell said, "We remain focused on delivering another record year in fiscal 2005. We have planned our release schedule for the important holiday quarter to emphasize established brands with games based on three top holiday films: The Incredibles, The SpongeBob SquarePants(TM) Movie and The Polar Express. In addition, we will release the next installment in our perennial top-selling SmackDown!(TM) series, WWE SmackDown!(TM) vs. Raw(TM) for PlayStation(R) 2.
"We have strategically scheduled S.T.A.L.K.E.R: Shadow of Chernobyl for PC, Pandemic Studios' Destroy All Humans(TM) for PlayStation 2 and Xbox, and The Punisher(TM), from internal studio Volition, for PlayStation 2 and Xbox for the fiscal fourth quarter, which we believe to be an optimal window for establishing new intellectual properties. In addition, we plan to release WWE(TM): Wrestlemania(R) XXI for Xbox in the fourth quarter in conjunction with the WWE's Wrestlemania promotional push," said Farrell.
Recent Developments
--THQ established a new franchise, Full Spectrum Warrior. The title ranked #1 on Xbox and #2 overall for the month of June, according to the NPD Group, Inc.
--THQ was the #2 independent publisher for the first half of calendar 2004 and maintained the ranking as the #1 independent publisher of handheld games, according to NPD.
--THQ strengthened its internal development capabilities to 18 teams through the expansion of key existing studios and the acquisition of leading PC studio Relic Entertainment in April 2004.
--THQ, consistent with its strategy to compete more aggressively in the high-end PC market, entered into a publishing agreement with Iron Lore Entertainment for an as-yet unannounced PC action role playing game (RPG) scheduled for release in fiscal 2006.
--THQ Wireless(TM) added agreements with Major League Baseball Advanced Media (MLBAM) and the Major League Baseball Players Association (MLBPA) to its growing stable of sports content, including recently announced agreements with the National Football League (NFL), PLAYERS, INC. (NFL Players), National Hockey League (NHL) and National Hockey League Players' Association (NHLPA).
Separately, the company announced that Eric Doctorow, who joined THQ as Chief Operating Officer in October 2003, has resigned to pursue other opportunities. Farrell will assume responsibility for Doctorow's duties while THQ evaluates candidates to join the company's executive team.
Investor Conference Call:
THQ management will host an investor conference call today, July 29, 2004, at 2:00 p.m. PDT (5:00 p.m. EDT) to review the company's financial results and operations for the quarter ended June 30, 2004 and discuss its future outlook. The call may be accessed by dialing 888-396-2356 or 617-847-8709, passcode 96271385, or by visiting THQ's Web site at http://www.thq.com.
THQ (Nasdaq:THQI) is a leading independent publisher of interactive entertainment software worldwide. The company develops its products for all popular game systems including the PlayStation(R) 2 computer entertainment system from Sony Computer Entertainment, the Xbox(R) videogame system from Microsoft, Nintendo(R) GameCube(TM) and Game Boy(R) Advance, personal computers as well as wireless devices. The THQ Web site is located at http://www.thq.com. The THQ Wireless site is located at http://www.thqwireless.com. THQ is a registered trademark of THQ Inc.
This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, the company's expectations for revenue and earnings (loss) per share for the quarter ending September 30, 2004 and the fiscal year ending March 31, 2005. These forward-looking statements are based on current expectations, estimates and projections about the business of THQ Inc. and its subsidiaries (collectively referred to as "THQ") and are based upon management's beliefs and certain assumptions made by management. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to economic, competitive and technological factors affecting the operations, markets, products, services and pricing of THQ. Unless otherwise required by law, THQ disclaims any obligation to update its view on any such risks or uncertainties or to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect THQ's financial results, described in other documents that THQ files from time to time with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal period ended March 31, 2004, and particularly the discussion of risk factors that may affect results of operations set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
THQ Inc.
First Quarter Earnings Announcement 2005
Consolidated Statements of Operations
(In thousands, except per share data)
Table 1 Three Months Ended
June 30,
2004 2003
--------- ---------
Net sales $88,194 $ 98,095
Costs and expenses:
Cost of sales 33,774 38,253
License amortization and royalties 7,007 9,252
Software development amortization 12,915 19,244
Product development 9,982 8,766
Selling and marketing 18,196 19,129
Payment to venture partner 524 465
General and administrative 12,816 9,362
--------- ---------
Total costs and expenses 95,214 104,471
--------- ---------
Income (loss) from operations (7,020) (6,376)
Interest income, net 972 733
Other income (expenses) -- (4)
--------- ---------
Income (loss) before income taxes (6,048) (5,647)
Income taxes (2,147) (2,090)
--------- ---------
Net income (loss) $(3,901) $ (3,557)
========= =========
Net income (loss) per share - diluted $ (.10) $ (.09)
========= =========
Shares used in per share calculation
- diluted 38,384 38,162
========= =========
The above table is derived from our Consolidated Statements of
Operations in accordance with U.S. Generally Accepted Accounting
Principles.
THQ Inc.
First Quarter Earnings Announcement 2005
Table 2 Balance Sheets
(In thousands)
June 30, March 31,
2004 2004
---------- ---------
ASSETS
Cash, cash equivalents and short-term
investments $242,813 $253,039
Accounts receivable - net 41,571 59,088
Inventory 18,097 22,303
Licenses 18,508 13,172
Software development 48,449 39,997
Income taxes receivable 5,860 --
Prepaid expenses and other current assets 11,114 9,451
---------- ----------
Total current assets 386,412 397,050
Property and equipment, net 18,780 17,468
Licenses - net of current portion 9,257 9,068
Software development - net of current
portion 10,751 9,798
Deferred income taxes -- 560
Goodwill - net 77,582 59,399
Long-term marketable securities 24,147 24,320
Other long term assets - net 15,620 9,488
---------- ----------
Total assets $542,549 $527,151
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 16,938 $ 22,147
Accrued expenses 33,376 22,361
Accrued payment to venture partner 422 746
Accrued royalties 34,178 41,305
Income taxes payable -- 216
Deferred income taxes 642 642
---------- ----------
Total current liabilities 85,556 87,417
Accrued royalties - net of current portion 875 1,142
Deferred income taxes - net of current
portion 1,149 --
Minority interest 1,126 --
Common stock 391 382
Additional paid-in capital 323,429 304,860
Accumulated other comprehensive income 8,876 8,302
Retained earnings 121,147 125,048
---------- ----------
Total stockholders' equity 453,843 438,592
---------- ----------
Total liabilities and stockholders'
equity $542,549 $527,151
========== ==========
THQ Inc.
Supplementary Tables
Three Months Ended
June 30,
2004 2003
---------- ---------
Platform Revenue Mix
Consoles
PlayStation 2 22.0 % 28.5 %
Xbox 27.9 19.7
Game Cube 4.6 7.0
PlayStation 2.3 3.8
------- -------
56.8 59.0
------- -------
Handheld
Game Boy Color - 1.4
Game Boy Advance 27.8 21.3
------- -------
27.8 22.7
------- -------
PC CD-ROM 10.7 15.8
Wireless 3.2 1.2
Other 1.5 1.3
--------- ---------
100.0 % 100.0 %
========= =========
Geographic Revenue Mix
Domestic 59.3 % 70.7 %
Foreign 40.7 29.3
--------- ---------
100.0 % 100.0 %
========= =========
COPYRIGHT 2004 Business Wire
COPYRIGHT 2004 Gale Group
|
